EU Debacle Is Far, Far From Over

FROM A BRIEF GUIDE TO THE EURO CRISIS @ ZERO HEDGE:

I have little faith in Papandreou's socialist PASOK government's ability to adhere to the agreement...I feel it may be one, if not THE, stumbling block in this whole eurozone mess. Greece will be dragged down perhaps for a decade or more because I don't see them instituting the necessary free market reforms that will spur future growth. I also don't believe it will be easy to dismantle the elaborate social welfare system there without political unrest. I wonder if not only the Papandreou will last long, but if a democratic form of government in Greece will last long.

And Greece is not the only problem. Spain and Italy are large economies and face similar problems, just not quite the scale of Greece's. It all comes down to their ability to fund their excessive debt. Even France is being warned about its credit rating.

The EMU is built on a weak foundation. They allowed in countries that according to the Maastricht Treaty were not supposed to run deficits of more than 3% of GDP, yet they all did, even Germany. They allowed their members to spend and borrow without regard to economic reality and now the money has run out. At some point one wonders if Germany will be outvoted and they elect to bail out debt through inflation by printing money.

It's a mess and it's not over.